The nightmare began with a phone call that would cost Anjali (not her real name) 58.5m rupees ($663,390). The caller claimed to be from a courier company, alleging that Mumbai customs had seized a drug parcel she was sending to Beijing. Anjali, a resident of Gurugram, a suburb of Indian capital Delhi, fell prey to a "digital arrest" scam — fraudsters posing as law enforcement officials on video calls and threatening her with life in prison and harm to her son unless she obeyed. Over five harrowing days last September, they kept her under 24/7 surveillance on Skype, terrified her with threats, and coerced her into liquidating her savings and transferring the money. "After that, my brain stopped working. My mind shut down," she says. By the time the calls stopped, Anjali was broken — her confidence shattered, her fortune gone. Her case is far from unique. Government data shows Indians lost millions of dollars to "digital arrests," with reported cases nearly tripling to 123,000 between 2022 and 2024. The scam has grown so rampant that the government has resorted to full-page ads, radio and TV campaigns, and even a prime ministerial warning. Officials say they have blocked nearly 4,000 Skype IDs and over 83,000 WhatsApp accounts linked to the fraud. Anjali has spent the past year shuttling between police stations and courts, tracing the trail of her vanished money and petitioning authorities — including the prime minister — for help. Victims say soaring scams, weak bank safeguards, and poor recovery expose regulatory gaps in a country where digital banking has outpaced cybercrime checks, ensnaring people across classes. Anjali says tracing her money trail exposed failures at every level of India's top banks. She told the BBC she rushed to her HDFC Bank branch — India's largest private lender — on 4 September 2024, panicked and under video surveillance by scammers, transferring 28m rupees that day and another 30m the next. She alleges that the bank failed to detect red flags or trigger alerts for abnormal transactions, even though the amounts she was transferring were 200 times larger than her usual pattern of withdrawals. She wonders why her premium account drew no call from her relationship manager and why the bank failed to flag such massive debits. "Should the size of transfers that I made all in a matter of under three days not have been enough to raise suspicion and even prevent the crime?" Anjali asks, noting that if credit card spends of 50,000 rupees trigger verification calls, why not multi-million withdrawals from savings accounts. In an email to Anjali, which the BBC has seen, HDFC called her allegations "baseless" and said the incident of fraud was reported to the bank after a delay of two-three days. It added that the transactions were authorised by the bank on her instructions so its officials cannot be faulted. India's banking ombudsman closed her complaint against HDFC, citing a 2017 rule that makes customers like Anjali bear the full loss if the fraud is deemed their mistake. HDFC Bank did not respond to the BBC's questions. When we met Anjali, she showed us a huge chart she had compiled of how her money travelled from one bank to another. It showed the funds first went from HDFC into an account held by "Piyush" in ICICI Bank, also one of India's largest private lenders. A police investigation into the money trail revealed that Piyush's account barely had a balance of few thousand rupees before the transfer. Anjali questions why ICICI permitted multiple fund transfers into the account "when such sudden large deposits should ideally have triggered automated transaction monitoring systems under any bank's anti-money-laundering obligations". She also wonders how the bank allowed a quick outflow of the money from Piyush's account without temporarily freezing it or doing additional Know Your Customer (KYC) verification. While ICICI has lodged a complaint against Piyush — who was briefly arrested and then freed on bail — Anjali says a delay in freezing his account proved very expensive for her. In a statement to the BBC, ICICI said they had followed all "prescribed know your client" procedures while opening the account and until the disputed transactions, it had exhibited no suspicious activity. It said "any insinuation that the bank failed in its due-diligence is entirely unfounded". The bank said it froze the account immediately after Anjali's complaint and helped her file a police case and trace the mule account-holder. The ombudsman has also closed her complaint against ICICI saying the bank had followed KYC rules when opening Piyush's account, and that it couldn't have predicted that it would be used for what it described were fraudulent activities. Police found that within four minutes of reaching ICICI, most of her money was funneled into 11 accounts at Sree Padmavathi Cooperative Bank, an affiliate of Federal Bank in Hyderabad city. They found that addresses of eight of the 11 were fictitious and the account holders couldn't be traced. Their KYC documents were also not available with the bank. The remaining three account holders were a rickshaw driver, a widow doing tailoring work in a small shanty town and a carpenter. Police found that except for one, the account holders were unaware of the large sums flowing through their accounts. In May, police arrested former director of the cooperative bank Samudrala Venkateshwaralu — he remains in jail, with the court rejecting his bail petition three times "considering the gravity and far reaching impact of cyber frauds". The police report alleges that many of these accounts were opened at the behest of Venkateshwaralu and were essentially mule accounts — which are opened in other people's names but sold to criminals who operate them to launder money. Neither Federal Bank nor Sree Padmavathi Bank responded to the BBC's detailed questionnaire. Over a year after losing her money, Anjali and others petitioned India's top consumer court in January, which admitted their complaint of "deficiency of services" by banks. The banks must respond, with a hearing due in November. As such scams get more complex, there are growing discussions worldwide around who ultimately pays for financial fraud — and what responsibility banks, financial institutions and regulators bear. Last October the UK tightened rules around the liability of payment service providers, requiring them to reimburse customers, barring exceptions who fall victim to some types of financial fraud. "Banks have a duty of care towards customers. If a bank observes any activity in an account that is inconsistent with its overall transaction patterns, it must stop that transaction," Mahendra Limaye, a lawyer who is fighting cases of a dozen digital arrest victims including Anjali's, told the BBC. He accuses the banks of indirectly "abetting the financial suicide" of the complainants by opening money mule accounts, failing in their duty to do continuous due diligence of customers and in their duty to preserve and protect their money. But so far, relief has proved elusive for Anjali — she has managed to recover barely 10m of 58m rupees she lost to the fraud. And Limaye says it's likely to be a protracted battle ahead. To add salt to her wounds, Anjali says, she is being forced to pay taxes on the money stolen from her. Investments redeemed are taxed on capital gains, even when they are lost to fraudsters. She is now pleading for exemption from such taxation. "As of now, there is no recognition of such crimes by the Income Tax department, This compounds the victims' financial misery," she says. — BBC
